There is a strong growing demand in the world for "organic" wool and
consumers are willing to pay a bonus, which is a promising advantage
for Uruguay and its textile industry, said Pedro Otegui, one of the
country's leading wool and textile exporters.

During a conference in the framework of the opening this week of the
2008/09 wool clip season and the Salto Agro Show, Mr. Otegui said this
has become "a great challenge for Uruguay", and the textile industry
should take advantage of this opportunity, not only because world wide
there's a growing demand for organic produce, but also because in the
coming quarter of a century the global population will increase well
over 1.5 billion people.

"Consumers are increasingly demanding quality and relief that what
they are buying does not alter or cause harm to the environment", said
Otegui who anticipated this will force radical changes in wool farming
and in the industrial process of textiles.

"As a company we are in the process of obtaining an organic
industrial license. There's a long protocol to comply which should
allow textiles, working with organic wool, to supply them with the
necessary certification to a market willing to pay for the extra
bonus", said Otegui.

However Otegui also pointed out that in some areas of Uruguay
there's a comparative advantage for organic wool production, "but not
for the whole of the clip, but a reasonable percentage".

As to the current industry demand, Otegui insisted that Uruguay must
emphasize fine and medium fine wool. "We know some farms are already
moving towards the organic certification process, so we estimate that
not too long from now, we should be able to supply the world Uruguayan
wool stamped with the organic seal".

Uruguay's flock falling: 10 m. sheep; 42 m. kilos of wool

Uruguay officially inaugurated this week the shearing season
announcing the 2008/09 clip should reach 42 million kilos, but farmers
and representatives from the textile industry warned about falling
competitiveness, soaring costs, an adverse exchange rate and a
burdensome tax reimbursement system.

According to the Uruguayan Wool Secretariat, SUL, the wool industry
in Uruguay will have this year an annual turnover of 360 million US
dollars, involving 60.000 jobs from camp to the final industrialization
of the fiber.

During the brief ceremony in the north of the country, Salto, SUL
president Gerardo Garcia Pintos said that "changes imposed to the tax
reimbursement system which does not return the net transfer of what
sheep farmers pay are having a negative effect on competitiveness and
furthermore dent the social impact of sheep rearing".

Garcia Pintos warned that Uruguay has a rapidly decreasing sheep
flock, although "far more efficient", which according to the latest SUL
census is expected to drop to 9.7 million head. He also claimed that
while this happens "the government seems more intent in privileging
foreign investors".

"Many times we hear speeches about how Uruguay looks after new
investors, but they seem to forget a huge investment in land, sheep,
technology, textiles supported by 10 million sheep in which Uruguayans
have been investing for decades", underlined SUL president.

Garcia Pintos also called for the elimination of a 1% sheep sales
tax collected by regional governments which he insisted should be an
only time levy. Uruguay recently approved an overhaul of the taxing
system and "it's time to eliminate this levy which dates back to over
half a century".

Speaking for industry Pedro Otegui, a leading textile exporter
called for a more "rational and realistic" exchange rate. Since 2005
the Uruguayan peso has appreciated almost 40% against the weakening US
dollar.

"The meager value of the US dollar, the increase in taxes, public
utility rates and a lowering of the tax reimbursement system are
increasingly punishing sheep farming and industry. And this is
particularly intense when all the production is exported and there's no
domestic market to help absorb, with an unprecedented appreciation of
the peso, the consequences of dollar inflation", underlined Otegui.

He added that many of the government's latest decisions are forcing
farmers to consider abandoning their activities and industry to
relocate or find some new undertakings. Otegui also mentioned that in
recent weeks the US dollar has experienced a strong recovery against
the Euro and the Australian dollar, "but overseas clients won't pay for
our inefficiencies, be them productive, monetary or financial".

Juan Manuel Bartaburu president of the Salto Rural Association which
hosted the inauguration said that even having 10 million sheep (against
a flock of 26 million a few years ago) should not be a problem if "we
produce fine wool and top high quality lamb".

He added that Uruguay should follow on the steps of New Zealand
which applied state of the art technology and expertise to convert the
sheep, wool and lamb industries.

"We must learn to live with other productions, those which help the
soil rest and recover, and we should not be afraid of some kinds of
grain agriculture", said Bartaburu.

The opening and cattle show which follows had on the occasion a very
low key representative from the government, the head of the regional
Agriculture Ministry office, Jose Tadeo. Usually it's the minister or
his deputy who preside over the ceremony.